How to teach your kids about: Keeping up with the Jones'
Before I start this blog about how to teach your kids about ‘Keeping Up with the Jones’’ , here are three money traits I really hope my kids (actually, all kids!) develop as they grow up:
1️⃣ Little or no interest in what other people are spending their money on
2️⃣ Putting some money away each month (so they have an emergency fund and have money working for them by investing)
3️⃣ Using their money to have great experiences and to help others
I wanted to highlight these three traits as the first is all about ‘Keeping up with the Jones’’ and without this it is really hard to develop the other two. This just shows how important this topic is and why all parents must start helping their kids understand the phenomenon and help them manage it. My kids already say things like “My friend has this” and “My friend has that”. It’s natural. It seems humans are designed to want things we can’t or don’t have. Whilst there is no right or easy answer in terms of how to help your kids avoid the desire to compare themselves, in this blog I go through four areas which I have discussed with my kids on this topic. 1. Making sure they know what ‘keeping up with the Jones’ means As ‘Keeping up with the Jones’’ is a natural phenomenon, the risk is they could grow up spending money on things without fully appreciating they are spending simply to keep up with other people. To help, I found this illustration below helpful when talking to my kids.
There will always be someone who has something bigger or better than them. If they are unhappy that they don’t have what others have then they will always be chasing happiness. This leads nicely on to the next point I discussed with my kids.
2. Helping them appreciate what they already have A quick short-cut to teaching them this is to let them watch the movie ‘Richie Rich’. Richie Rich has everything; a theme park in his garden and, his very own McDonald’s in his house. What he doesn’t have though is any friends.
Help kids appreciate that actually the best things in life don’t have to cost money. We talk about our best memories and they are all based around experiences with friends and family rather than material objects.
3. Highlighting that the Jones’ are not always as they seem! Similar to the point above, we all look at what people have and make assumptions. One thing I have learnt is that these assumptions are wrong in a lot of cases if you find out more about The Jones’. I’ve met people who have lots of great things but they have to work every hour under the sun just to keep those things (mostly big houses and expensive cars). This might be fine if they loved working and didn’t have a family. In most cases they do have a family which they don’t see as often as they’d like. Show your kids the picture below. Explain that what we see of the Jones’ is like the ‘Front’ but in most cases there is something going on behind the scenes which might not be as good, like the ‘Back’. Essentially, as we don’t know everyone’s full story there is no point trying to be like them.
4. Getting them to understand financial security is the priority In my mind, people who are wealthy are not those that have lots of nice things. Instead it is those who have financial security, are not living in fear of being in financial trouble, those not spending beyond their means but who are making their money work for them. Therefore, when my kids talk about other people and their money (which isn’t a lot), I say “Do they have a Blue Tree forest?” (for those that haven’t read one of my blogs before, I refer to my kid’s savings as Blue Trees so they can see them grow over time). I stress that if people don’t have their own Blue Tree forest then they are unlikely to be financially secure and therefore they should not want to compare themselves to them. I love talking to my kids about famous people who have done some amazing things with their money rather than just spend it. For example, Will.i.am (lead singer from the group the Black Eyed Peas) invests in and works with companies he is truly passionate about and is making more money from that than actually singing. Whenever my kids want to buy something they are allowed to but I always remind them to put at least 10% of all the money they receive away to help grow their Blue Tree forest. Over time I hope this becomes a habit which will help them avoid spending all their money. From my own experience, I get a sense of empowerment from knowing I have savings. I wouldn’t give that up for a bigger house or a fancy car. On a final note, in this blog I haven’t gone through the negative financial impacts of trying to keep up with the Jones’. This is largely covered in my blog ‘How to teach your kids about: the Wealth Formula’ (where I use Elsa from Frozen and Yoda from Star Wars to highlight the impact of overspending in a bid to show-off). Summary As our kids are human they are always going to want to have what they can’t have. Whilst I’m not claiming that the above will completely stop them spending money on things just because others have them, I do believe it will help them rationalise why they can’t always have what they want. So, try talking to your kids now about the following four areas:
Making sure they know what ‘keeping up with the Jones’ means
Helping them appreciate what they already have
Highlighting that the Jones’ are not always as they seem!
Getting them to understand financial security is the priority
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Book recommendation: The Millionaire Next Door by William D Danko and Thomas J Stanley. This shows the traits of millionaires with a particular focus on not caring about what other people think.